A franchise disclosure is a document that every franchisee must file with the IRS every year.
And every year, a small number of franchisees must also report to the IRS how much money they’ve made and how much they have in the bank.
The IRS says it receives roughly 20,000 complaints each year from franchisees who have been incorrectly filed their disclosures, and it has identified a handful of bad ones.
The bad ones are referred to as franchise violations, and they typically happen when a franchisee doesn’t fully disclose how much income they’ve received.
In some cases, a franchise can actually be in the red for the year for gross receipts and gross income, but a lot of franchise owners are very careful to keep things in perspective.
Here’s how to know if a franchise is in the clear.
Check out the franchise disclosure.
Franchisees are required to file a franchise disclosure annually.
Here is what you need to know about filing a franchise statement.